Question

Harper Company lends Hewell Company $14,400 on March 1, accepting a four-month, 6% interest note. Harper Company prepares financial statements on March 31. What adjusting entry should be made before the financial statements can be prepared

Answer 1

Answer:

Dr Interest Receivable $72

Cr Interest Revenue $72

Explanation:

Based on the information given the appropriate adjusting journal entry that should be made before the financial statements can be prepared will be to Dr Interest Receivable $72 and Cr Interest Revenue $72.

Dr Interest Receivable $72

Cr Interest Revenue $72

($14,400 × 6% × (1 months ÷ 12 months)]

$72